Correlation Between Telkom Indonesia and BAB
Can any of the company-specific risk be diversified away by investing in both Telkom Indonesia and BAB at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Telkom Indonesia and BAB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Telkom Indonesia Tbk and BAB Inc, you can compare the effects of market volatilities on Telkom Indonesia and BAB and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Telkom Indonesia with a short position of BAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telkom Indonesia and BAB.
Diversification Opportunities for Telkom Indonesia and BAB
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Telkom and BAB is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Telkom Indonesia Tbk and BAB Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAB Inc and Telkom Indonesia is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Telkom Indonesia Tbk are associated (or correlated) with BAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAB Inc has no effect on the direction of Telkom Indonesia i.e., Telkom Indonesia and BAB go up and down completely randomly.
Pair Corralation between Telkom Indonesia and BAB
Considering the 90-day investment horizon Telkom Indonesia Tbk is expected to under-perform the BAB. But the stock apears to be less risky and, when comparing its historical volatility, Telkom Indonesia Tbk is 1.99 times less risky than BAB. The stock trades about -0.03 of its potential returns per unit of risk. The BAB Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 75.00 in BAB Inc on September 2, 2024 and sell it today you would earn a total of 5.00 from holding BAB Inc or generate 6.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Telkom Indonesia Tbk vs. BAB Inc
Performance |
| Timeline |
| Telkom Indonesia Tbk |
| BAB Inc |
Telkom Indonesia and BAB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Telkom Indonesia and BAB
The main advantage of trading using opposite Telkom Indonesia and BAB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telkom Indonesia position performs unexpectedly, BAB can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in BAB will offset losses from the drop in BAB's long position.| Telkom Indonesia vs. T Mobile | Telkom Indonesia vs. Comcast Corp | Telkom Indonesia vs. Lumen Technologies | Telkom Indonesia vs. Charter Communications |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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